LENNYBEERBLOG:
NOTES ON A SCORECARD

2. Best movie of the year is a topic much in discussion at the office these days. I'm leaning toward the near-perfect No Country for Old Men right now, and the possibility that it is finally time for everyone to anoint the Coen Brothers for this movie and their body of work. I put the film slightly ahead of the incredibly entertaining Juno (whose soundtrack is the year's first phenomena), the brilliantly conceived Atonement and the old-school Hollywood filmmaking of Michael Clayton. I am NOT on the There Will Be Blood bandwagon, although I believe Daniel Day-Lewis is the current frontrunner for Best Actor.

3. I think one of the key topics to discuss in '08 will be variable pricing, which now replaces DRM as the argument of choice for many key digital players. Most labels, we think, would be for it, especially on deep catalog, but the publishers are resisting making the necessary concessions.

4. At this week's first class of the UCLA year, the term SEM was used extensively. It's a great nickname for search-engine marketing, a topic we all need to learn more about. I would also like to applaud my co-teachers—the extremely tall Jeff Jampol and Universal Publishing stud Tom Sturges. Their dedication to making our team stronger each season inspires me constantly. We have lots of great guests lined up for this year, so come on down on Wednesday nights and join the brainstorming going on in each class.

5. And to close, I say bring on the new year and let's get on with figuring out what the music business of the future will look like and how quickly we can guide the change along its way. As always, I encourage you to share your thoughts and opinions on any or all of the above: [email protected]
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Hey Lenny

Loved the class last week. The three professors on the island of UCLA with the palm trees swaying and the music playing... digital downloads outselling content providers.

Lenny -

Hopefully, 2008 will be better than '07... but if the industry doesn't take some real fast action to move forward this year, things will continue to get progressively worse.

Some of the topics for '08 should include:

- Reinvesting in REAL artist development. The sales of artists like Alicia Keys (3 million plus), The Eagles (3 million plus), Carrie Underwood (3 million), and new artists like Colbie Caillat, Keyshia Cole, Taylor Swift, etc., all verify that despite all the problems the industry faces (specifically illegal downloading), that people will buy great music in great quantities when they know they are getting more than one or two good tracks on an album. Reinvesting in artist development, coupled with some good, old-fashioned A&R, will cure the industry's sales ills quicker than anything else and provide labels with much better rosters for the future.

- CD prices need to be re-evaluated almost immediately. This week comes the news that the average selling price of a DVD dropped 0.5% to $14.63. While $14.63 might be the average price for a DVD, I found tons of DVDs on sale during the holidays and after, for as low as $5, and many for $7. And they weren't DVDs of bad movies, they were just a few months older than the new releases. But there they were on tables in Wal-Mart, Target, the
supermarkets, drugstores and almost any mass merchandiser. With DVDs now selling at such low prices, how much longer can the music industry keep CD prices at the $10 level in an ever-shrinking disposable income market with a multitude of entertainment options?

- Exploring potential strategic alliances with hi-tech partners to seek symbiotic relationships. It's hard to believe that at this late date the major labels and the alleged industry association, the RIAA, have not created some sort of symposium or annual meeting with the best leaders in technology to forge new partnerships or find solutions to creating new and better ways for the industry to generate new revenue streams online. Why aren't all major labels trying to create great online stores like iTunes and amazon.com?

- Exploring CRM (Customer Retention Management) possibilities. Almost every other industry in business today has CRM strategies in place as an integral part of its operations. It's high time the music industry applied some basic CRM strategies for its own benefit. If created and applied correctly, these strategies could go a long way in increasing revenues long-term.

- Creating new ancillary revenue streams. With artists like Madonna, Paul McCartney, James Taylor, The Eagles, Jimmy Buffet, Prince and others, all taking matters into their own hands by looking for new ways to create their future success stories, labels need to create vertically integrated businesses to capture as much of the potential revenues available from a variety of sources.

Steve Meyer
President/CEO
Smart Marketing Consulting Services